South Sudan Housing Finance

Report
Author: Duncan Kayiira
Date: July 2012

SOUTH SUDAN
Exchange Rate: 1 US$ = "

2.68 (South Sudanese Pounds (SSP)1

Main Urban Centres

Juba (Capital City)

Population ^

8 260 4902

Population growth rate (2005-2010)^

2.83

Urban population (% of total) 2009

17%

GDP per capita^

SSP 3,654 ($ 1,363)4

GDP growth rate (real, 2010)^

The countrys GDP was expected to

grow by 6% in 2011, increasing to
7.2% in 20125

HDI (Global Ranking)+

Unemployment rate^

30%6

Population less than US$2 per day

over 80%7

Population below national poverty line^

50.60%8

Lending Interest Rate (2009)

15-18%9

Deposit Interest Rate (2009)

Mortgages % of GDP

Not Available

Cost 50 kg bag cement (July 2011) US$

SSP 12010

Cost of standard sheet of corrugated sheet iron US$

SSP 13511

Price of the cheapest newly built house, by a formal

developer (US$)
Smallest size of a formal house (m2)

$ 45,00012
75 sq. metres13

OVERVIEW OF THE POLITICAL ECONOMY

th

South Sudan is a fragile post conflict country and only recently gained independence on the 9 July 2011. The
attainment of independence fulfils a major component of the Comprehensive Peace Agreement (CPA), which
was signed in 2005, between the Government of Sudan and the Sudan Peoples Liberation Army (SPLA).
The signing of the CPA and subsequently, the adequate implementation of some of its provisions has played a
great role in bringing to an end decades of conflict (1955-72, and 1983 - 2005), between the North and the
South.
The effects of the conflict on the South have been severe and profound, to both the social and economic status
of the country. Over the last two decades (1983 2005), there has been a marked neglect of infrastructure
development, which has among others, discouraged the expansion and growth of key sectors of the economy.
The institutional capacity of the public sector has literally been non-existent; standards compliance capacity is

Source: http://www.fxcheck.net/foreign-exchange/sdg-to-usd-exchange-rate/
Source: Statistical Yearbook for Southern Sudan (2010)
3
Source: http://www.wvafrica.org/index.php?option=com_content&view=article&id=152&Itemid=169
4
Source: National Bureau of Statistics; Government of South Sudan; 2011
5
Source: http://www.sudantribune.com/South-Sudan-targets-6-per-cent,39144
6
Source: http://www.migrationheritage.nsw.gov.au/exhibition/sudanesestories/life-in-southern-sudan/
7
Source: www.unsudanig.org/.../MDGs%20in%20Southern%20Sudan
8
Source: Poverty in Southern Sudan; Estimates from National Baseline Household Survey; 2009
9
Source: M. Atil (2009) Access to Finance in South Sudan
10
Source: Interview with Building Contractor in South Sudan
11
Source: Interview with Building Contractor in South Sudan
12
Source: http://www.newsouthsudan.com/south/detjuba.pdf
13
Source: Interview with Building Contractor in South Sudan
2

minimal and non-existent in several States and firm-level productivity is below acceptable regional and
international standards, and further undermined by shortages of skilled labour.
It is worth noting that the situation in South Sudan following the declaration of independence is in sharp
contrast to the one that prevailed in the North (primarily in Khartoum) when the British troops departed in
1965 (E. Kameir; 2011). To illustrate, Sudan inherited from the colonial rule in 1956 a viable civil service, a
worthy judiciary, a well-functioning railway network, the largest irrigated agricultural scheme in Africa, a well
14
disciplined army and police force, and a reputable educational system up to tertiary level . These institutions
were in primarily in the North, however, leaving the South with very few such institutional assets at its
independence, 46 years later.
Still, South Sudan achieved a key milestone in its first five months of independence: the development of the
Sudan Growth Development Plan (SSDP) 2011 2013. The Development Plan provides a roadmap for
instituting capacities that will be essential for the achievement of the countrys development goals during the
period 2011-2013. Key priorities of the Growth Strategy include:
1.

Extending public security and the rule of law throughout the country by transforming, professionalizing
and expanding key security and judicial institutions;

2.

Enabling economic growth and investment by establishing essential legal and regulatory frameworks, and
expanding vital transport, communications and energy infrastructure;

3.

Improving social welfare by expanding the populations access to basic education, health, water and
sanitation services coordinated, regulated and provided by local institutions;

4.

Building public administration that efficiently provides public goods and services to the population through
the development and management of a qualified and professional public service, and establishing
mechanisms to attract qualified South Sudanese, including from the Diaspora;

5.

Establishing an accountable and transparent system of governance at national and local levels to
effectively articulate national priorities, and manage national resources in an equitable and effective
manner.

Adequate and successful realization of the above five priorities will greatly depend on good political and
economic governance, based on transparency and a common vision of national unity.
SELECTED FACTS ABOUT THE MACRO-ECONOMY
South Sudan's economy is one of the weakest in the world. The economy is still fragile, and underdeveloped.
Worse still, experience in macroeconomic management within the country is limited, largely because this
15
responsibility was retained by the Government of Sudan, in Khartoum, as per the CPA provisions.
Since independence, substantial efforts have been undertaken that will, in the short to medium term, allow for
robust economic growth, and the establishment of adequate financial infrastructure. Among these has been
the establishment of the Bank of South Sudan, which will be responsible for the formulation, conduct and
implementation of the countrys monetary policy.

14

E. Kameir; 2011
The Government of South Sudan does not have full autonomy when it comes to macroeconomic policies. To a large extent, Southern
Sudans macroeconomic situation is linked closely to and dependent on Sudans overall macroeconomic developments and Khartoum
policies. For example, the GOSS does not have control over the growth of money supply and credit, the change in monetary reserve
requirements, or other monetary policy instruments (USAID; 2009 South Sudan: Post Conflict Economic Recovery and Growth)
15

GDP Growth Rates

South Sudan has experienced uneven GDP growth during the last three years. Between 2008 and 2009, GDP
growth receded by 14 percent, from SSP 28.505 billion (US $ 10.6 billion) to SSP 24.95 billion (US $ 9.3 billion).
In 2010, there was a substantial recovery. GDP was estimated at SSP 30.5 billion ($ 11.4 billion), representing
25 percent growth increase from 2009 (South Sudan National Bureau of Statistics; 2011).
The oil sector is the largest contributor to GDP, both in terms of direct value-added to the economy as well as
the associated investment boom and boost to the services industry. Oil exports accounted for 71 percent of the
total GDP in 2010. The high reliance on oil has created a situation of volatile revenues and, due to the lack of
buffer savings through the CPA period, government expenditure has been relatively unstable.
Current forecasts point to a peak in oil sector production; however, there is a strong likelihood that oil export
revenues will decline over time. According to the International Monetary Fund (IMF), by 2018, known oil
reserves in South Sudan will be close to exhaustion.
The economic policy dialogue is presently turning to the need for balanced growth and strengthening the nonoil sectors, which are key to sustainable growth and addressing the inequalities. Agricultural development is
viewed as the engine of growth, which will not only allow South Sudan to diversify its economy away from oil
dependence, in the medium term, but also to directly reduce poverty and food insecurity.
GDP per capita
16

GDP per capita in 2010 was SSP 3,654, ($ 1,363) down from SSP 3,541 ($ 1,321) in 2008 . A comparison with
countries in the East African Region shows that South Sudans GDP per capita is higher than in its neighbours in
the East African Region. In Ethiopia, the GDP per capita in 2010 was estimated at $ 350, Burundi - $ 189,
Rwanda - $ 548, Kenya - $ 769, Uganda - $ 503, Democratic Republic of Congo - $ 169 and Central Africa
17
Republic - $ 447.8 .
Oil production explains why GDP per capita is higher in South Sudan than its neighbours in the East African
Region, even though South Sudan has worse outcomes on other development indicators such as education and
health. Just over half (50.6 percent) of the population live below the poverty line, with a gnawing gap in
poverty levels between classes and within States. This means that one out of two South Sudanese do not have
18
the necessary means to purchase the value of a minimum food and non-food bundle . In the East African
Region, the poverty levels are estimated at below 35 percent.
ACCESS TO FINANCE
Presently, there are eight banks that operate within the country. The largest is Kenya Commercial Bank (KCB),
19
which intends to double its presence to 30 branches, covering 100,000 people by 2015 . Nile Commercial
Bank, Buffalo Commercial Bank, Ivory Bank, Equity Bank, Commercial Bank of Ethiopia, Agricultural Bank of
Sudan, and Mountains Trade and Development Bank also operate within the country.
The commercial banks lending portfolio is small, covering only a small percentage of the estimated market in
20
the country (7 percent of approximately 6000 registered firms and less than 1 percent of gross revenue) .
Generally, lending in the country is inadequate, and can neither address the demand for large scale loans (for
agricultural finance, and investment in the manufacturing and real estate sectors), nor demand for start-up
16

Source: South Sudan National Bureau of Statistics; 2011

Sourced from World Development Indicators; 2010
Source: Southern Sudan Centre for Census Statistics and Evaluation; 2009
19
Source: African Business Initiative; US Chamber of Commerce; September 2011
20
Source: M. Atil (2009). Access to Finance in South Sudan
17
18

capital by local South Sudanese firms. In 2008, the majority of the loans (70 percent) were advanced to large
firms in commerce, trade, and service sectors, as working capital. Only 30 percent of the loans issued in that
year were to individuals, drawn to finance the purchase of vehicles and undertake home improvement
developments. This lending trend consistently featured in 2009 and 2010.
Commercial banks are generally reluctant to lend, largely because of the structure of their deposits. The
majority of the deposits are short-term (less than a month), and drawn upon regularly. Deposits on saving
accounts are still few. Some banks have instituted measures to encourage customers to save more, by offering
an interest rate of up to 1.75 percent on saving accounts. This rate is however low, by regional standards, and
reflects the nascence of the banking industry in the country.
Generally, the saving culture in the country is poor, and the country has been labelled by several authors as a
primordially cash economy, due to high ratio of costs to salary levels and a preference for informal or
traditional saving methods.
Loan tenures are short term (3-6 months), and at high interest rates (15 18 percent per annum). Collateral for
loans is in most cases not available, though, some banks have innovatively sought other forms of guarantees as
security for the loan such as leasing (keeping the purchased asset in the name of the bank until complete
repayment), direct payment by the employer or final purchaser of the good (arrangements where an external
party pays the bank directly such as is the case for government procurements or salary loans).
According to the World Banks Doing Business Report 2010, the only criterion used by banks in Juba to appraise
their clients is the KYC rule: Know Your Customer. Generally, the lack of credit history is a major constraint to
access to finance in South Sudan. Most companies were established recently (post CPA period) and few have a
past credit record.
Further, banks rely on other customers who know the community to give information about prospective
debtors. Loans are advanced based on personal connections, and not necessarily on the likelihood of
repayment.
As a result, non-performing loans (NPLs) are a common feature on several banks portfolios; and worse still, the
banks do not have adequate methods of enforcing repayment. The Judiciary system, which would play a key
role in such scenarios, is severely constrained in terms of both capacity and resources and is untested in the
dispute resolution of loan defaults.
In the World Banks Doing Business Report, Juba scores 0 out of 6 on the depth of credit information index
because South Sudan has no public credit registry or private credit bureau.
HOUSING SUPPLY
Until recently (2008), South Sudan has not had a well managed scheme on the supply of housing.
The countrys current housing supplies are basic, of dismal quality and unique to a post-conflict country, which
has not had well functioning institutions for a relatively long period of time (a decade or so). The type of houses
in the country vary from mud and stick houses (known as Tukul/gottya) to tents, dwellings with straw mats,
and single storey houses built with mud or concrete. See Fig. 1 for more details.

Fig. 1: Type of housing and % of population housed by the various types

Tent,
1%
Dwelling from straw mats,
5%

House constructed of
wood, 3%

Incomplete, 1%

House of one floor House of one

brick-concrete, 2%
floor-mud, 5%
Multi-storey house, 0%

Villa,
1%

Flat or apartment, 0%
Tukul/gottya
sticks, 19%
Tukul/gottya mud, 65%

Source: Statistical Yearbook for Southern Sudan; 2010

The present housing types and supplies are also
21
reflection of the low income levels , and the use
of personal savings to build homes incrementally
over time.

Fig. 2: An example of a Tukul/gottya (built with mud and

sticks)

The vast majority of the population (93.3 percent)

live in houses they own, 2.7 percent in rented
houses, 0.6 percent in houses provided as part of
work and 3.4 percent in houses provided free of
22
charge .
About a third of the population (31 percent) live in
houses with only one room, 64 percent live in
houses with 2 to 4 rooms, and 5 percent of the
population live in houses with 5 to 9 rooms.
With regard to consumption patterns/expenditure, the present consumption per person per month in urban
and rural areas is estimated at about SSP 100 (about US$ 37.3), and of this amount, housing (materials for
maintenance of dwelling, and repair of household appliances, among others) constitutes only SSP 4 (about, or
less than US$ 1.5).
While the Government is committed to addressing the dismal state of housing in the country, there are more
urgent and competing concerns such as maintaining peace and security at this crucial time of transition. For the
2010/11 budget, the government allocated SSP 23 million (US$ 8.5 million) to undertake a pilot affordable
housing scheme. In the same budget, the government allocated SSP 5 million (US$ 1.8 million) for the Juba
Town sewage and sanitation project.
The Central Equatorial State, one of the ten States of the country, has also embarked on a relatively large scale
housing project, which is intended, in the short to medium term at least, to ease on the need for decent
housing. The project was launched in 2008, in partnership with Abu Malek Companies & Agencies Ltd, the
mandated project promoters for the Government of South Sudan. The project is estimated to cost US$ 650
21

The main source of livelihood for the majority (71 percent) of the population is crop farming, 7 percent source their livelihood on animal
husbandry, 11 percent source their livelihood on wages and salaries, 3 percent on owned business enterprises, 1 percent on property
income and 7 percent on others sources.
22
Source: Statistical Yearbook for Southern Sudan; 2010

million, and will set up a master plan community project in the City of Juba and Kajo Keji. The project will cover
16 square kilometres and will feature the following:

9,000 housing units will initially be built, and the number will scale up, depending on the levels of
success of the project
Commercial areas that will facilitate marketing and trading activities
Industrial areas that will give way to products manufacturing and
Agricultural projects that will guarantee local food supply for domestic and export marketing.

The housing units will be delivered in four classes (A, B, C and D), for eligible South Sudanese, with complete
community facilities, including water, power, telecoms, roads and drainages. Prospective homeowners will
have the option of either acquiring a unit by cash or lease to own within a defined period.
Type A and B houses will be designed for high-income earning households. A total of 500 Type A houses and
1,000 Type B houses will be built for the start.
The features of Type A houses will include a floor area of 200 sq. metres, 2 floors of concrete structures, 4
bedrooms, one master bedroom, a kitchen, dining room, 2 toilets and bath a laundry area, and a car park.
These houses will be sold at US$ 300,000. The Nile Commercial Bank has secured the rights to pre-sell the
units. Terms will include 15-year tenure (balance amortized equally for 180 months plus interest), 20 percent
23
down payment, and a monthly payment of $ 2,500 .
The features of Type B houses will include a floor area of 150 sq. metres, 2 floors of concrete structure, 3
bedrooms, one master bedroom, a kitchen, dining room, 2 toilets and bath, a laundry area and a car park.
These houses will be sold at US$ 200,000. The Nile Commercial Bank has secured the rights to pre-sell the
units. Terms will include 15-year tenure (balance amortized equally for 180 months plus interest), 20 percent
down payment, and a monthly payment of $ 1,600.
Type C houses will be built for middle income households. A total of 2,500 units will be built for the start. The
features for these houses will include a floor area of 120 sq. meters, 2 floors of concrete structure, 2 bedrooms,
one master bedroom, a kitchen, a dining room, one toilet and laundry area at the back. These houses will be
sold at US$ 96,000. The Nile Commercial Bank has secured the rights to pre-sell the units. Terms will include
15-year tenure (balance amortized equally for 180 months plus interest), 20 percent down payment, and a
monthly payment of $ 750.
Type D houses (Flats 5 stories, each with 10 flats) will be built for low income households. A total of 5,000
flats will be built for a start. The features for the flats will include a floor area of 75 sq. metres, 3 bedrooms, 1
kitchen, a dining room, one toilet, and a bathroom. These flats will be sold at US$ 45,000. The Nile Commercial
Bank has secured and allowed to pre-sell the units. Terms will include 15-year tenure (balance amortized
equally for 180 months plus interest), 20 percent down payment, and a monthly payment of $ 350.
In another development, the Kenya Commercial Bank (KCB) Group's mortgage subsidiary, S&L, has signed a $
24
452 million housing deal with the Government to fund construction of 1,750 housing units for civil servants .
PROPERTY MARKETS
The property markets in South Sudan are still under developed, unsophisticated and hard to estimate both in
qualitative and quantitative terms. It is envisaged that the completion of the housing projects currently
underway will contribute immensely to the development of the property markets in the country.
23
24

The interest rate is fixed

Source: The New Vision; June 2, 2009

AFFORDABILITY
The majority of the people (about 90 percent) of South Sudan live in rural areas and are employed informally in
mainly the agriculture sector (smallholder agriculture, farming, livestock and fishing). Only 10 percent of the
workforce is formally employed, of this, Government employees constitute the biggest portion (above 50
percent). Of those employed by government, the majority (54 percent) are low income earners, with monthly
income ranging between 300 (US$ 112) and SSP 999 (US$ 372).
Lower to middle income households can be categorized under two segments; (i) those that earn between SSP
1,000 (US$373) and SSP 1,999 (US$ 745) and (ii) SSP 2,000 (US$ 746) and SSP 4,000 ($1,492). The middle
income class earns between SSP 4,001 (US$ 1,493) and SSP 7,999 (US$ 2,984.
The highest income earning households are estimated at about 1.4 percent, with monthly income between SSP
8,000 (US$ 2,985) and SGD 15,000 (US$ 5,597).
Table 1: Estimates of Pay Structure and Probable Number of personnel per structure
Pay Structure Pay Structure Eligible Personnel
Number
Types of Houses that can be
(SSP)
(Equivalent is
of
afforded
USD)
Personnel
8,000
2,985 5,597
Includes
Members
of
346
Individuals that earn above
15,000
Parliament,
Presidential
SSP 10,720 (US $ 4,000) can
Advisors, Ministers, President
afford houses of US $
of the Supreme Court, Under
200,000 which are targeted
Secretaries,
and
Legal
for middle income earners.
Counsels
None of these individuals can
afford houses of US $
300,000 which are targeted
for their income levels
4,001 7,999 1,493 2,984
Includes Justice of the Courts
434
Individuals that earn above
of Appeal, High Court Judges
SSP 5,025 (US $ 1,875) can
and 1st, 2nd and 3rd Legal
ably afford a house of US $
Counsels
96,000. They cannot afford
houses of US $ 200,000
which are targeted for their
income levels
2,000 4,000 746 1,492
Includes 1st Lt. Generals, Lt.
2,031
These individuals can ably
Generals, Major Generals and
afford flats of US $ 45,000,
Brigadiers and Assistant Legal
which are targeted for low
Counsel and Public Servants in
income earners. They cannot
Grade 1 to 6
afford houses of US $ 96,000
which are targeted for their
income levels
1,000 1,999 373 745
Includes Colonels Lt. Colonels,
8,991
These individuals can not
Major and Captains, and
afford the flats of US $
Public Servants in Grade 7 to
45,000, which are targeted
10
for low income earners
300 999
112 372
Includes
Lieutenants,
13,790
These individuals can not
Sergeant,
Corporals
and
afford the flats of US $
Privates and Public Servants in
45,000, which are targeted
Grade 11 to 17
for low income earners
Source: South Sudan Budget; 2011
From the above data, there is a strong suggestion that there is limited effective demand for the housing
projects that will be undertaken in the country, including the one that has already been embarked upon in the
Central Equatorial State.

For example, as highlighted in the section on housing supply the Central Equatorial State Housing Project,
flats that will be built for low income earners will cost $ 45,000, and prospective owners will have to remit a
monthly payment of $ 350. However, from Table 1, given that low income households salaries swerve around $
350 and much lower, and yet, a standard monthly payment of a mortgage should not exceed 40 percent of
ones salary, none of the households in this income group will be able to afford the flats. The flats can, on the
other hand, be ably afforded by the second segment of the lower middle income group that earns between SSP
2,000 ($ 746) and SSP 4,000 ($ 1,492).
For middle income earners, not all earn well enough to ably pay for the houses that will be built for their group.
Houses for middle income earners will cost $ 96,000 and prospective home owners will have to remit a
monthly payment of $ 750. From Table 1, the middle income group earns between SSP 4,001 ($ 1,493) and SSP
7,999 ($ 2,984). Since a standard monthly mortgage payment should not exceed 40 percent of ones salary,
individuals that earn between SSP 4,001 ($ 1,493) and SSP 5,025 ($ 1,875) will not be eligible for these houses.
In the high income earning group, a similar scenario to that of the middle income group is evident.
POLICY AND REGULATION
There is no evidence of a South Sudan housing policy. Nonetheless, the country has a Ministry of Housing in
place, and one of its ongoing projects is to design and implement a legal and regulatory framework that shall
enable the Government of South Sudan to mobilize public and private sector resources to rehabilitate the
existing, war-ravaged, public buildings and utilities, with a special emphasis on urban areas.
Further, one of the key priorities of South Sudan Development Strategy is improving social welfare by
expanding the populations access to basic education, health, water and sanitation services that are
coordinated, regulated and provided by local institutions.
According to a Land Act, approved in 2009, there are three systems of tenure: Customary, Freehold, and
Leasehold. Land is classified as public (held by government), community (held by communities) or private land
(leaseholds of up 99 years and freeholds). The Land Act effectively details:

Ownership rights proven by legal title for all short term leases

A decentralized system of land registry maintained by the Ministry of Housing, Physical Planning and
Environment

The right for title holders to use the land as a surety to secure debt (where mortgage contracts are to
be registered in the land registry), and

The right for creditors to foreclose on land title in case of default. It should however be noted that
while the Land Act allows creditors to foreclose on land as collateral, no laws currently detail the
creditors rights and appropriate registry for other types of collateral. It is important that such legal
frameworks (the equivalent of the Mortgage Act) are established as well as an associated system of
standardized collateral evaluation and registry, to better facilitate the provision of fixed asset based
lending.

Although legislation expounds the institutions and mechanisms for titling, registry, and the right to use land as
collateral, the institutions in place are still at a nascent stage of development, and have not yet been tested
adequately. For instance; the institutions which currently register titles have low capacity and lack appropriate
IT Systems, procedures and support (especially at decentralized level). Other structures will also need to be

developed for the compensation for expropriation and the application of customary practices/law (described in
25
the Land Act)
In the past, because of the absence of a clear system for land titling and registry, some banks have been
reluctant to accept land as collateral, while other banks accept so called British Leasehold with 30 remaining
years as collateral, while other banks accept land titles for Juba based property only.
OPPORTUNITIES

The number of commercial banks need to be scaled up, to allow for more competition and dynamism
within the banking industry. Further, there is need to institute long-term finance schemes within the
banking system, if the lending culture of banks is to appreciate.

There is need to attract more organized real estate developers, both local and foreign, if the country is to
address the shortage of housing.

There is need to guide and build technical capacity of NGOs and other donor funded organizations to start
initiatives in which they fund Micro Finance Institutions to start issuing housing micro-finance products
such as home improvement loans.

There is need to facilitate and support the establishment of housing cooperatives in which individuals
would obtain houses under conditions that suit their incomes.

SOURCES CONSULTED

2.
3.
4.
5.
6.
7.
8.
9.
10.

1. African Business Initiative; US Chamber of Commerce; (2011)

Atil M. (2011): Access to Finance in South Sudan
GoSS (2010) South Sudan Growth Development Plan (2011-2013).
GoSS (2011) Statistical Yearbook for Southern Sudan.
GOSS (2009) Poverty in Southern Sudan; Estimates from National Baseline Household Survey
Kameir, E. (2011): The political economy of South Sudan: a scoping analytical study
The New Vision, June 2nd 2009.
USAID (2009) South Sudan: Post Conflict Economic Recovery and Growth
World Bank (2010): Doing Business in Juba
World Bank (2010) World Development Indicators

Websites
http://www.fxcheck.net/foreign-exchange/sdg-to-usd-exchange-rate/
http://www.wvafrica.org/index.php?option=com_content&view=article&id=152&Itemid=169
http://www.sudantribune.com/South-Sudan-targets-6-per-cent,39144
http://www.migrationheritage.nsw.gov.au/exhibition/sudanesestories/life-in-southern-sudan/
www.unsudanig.org/.../MDGs%20in%20Southern%20Sudan
http://www.newsouthsudan.com/south/detjuba.pdf
http://www.newvision.co.ug

25

Ibid

10